US investment bank JP Morgan plans to add at least 700 staff to its Asia-Pacific headquarters in Hong Kong over the next three years, and lease up to 11 floors in a new office block to accommodate the growth.
While the sub-prime crisis has hit the world's biggest financial institutions, they are still notching up high growth in Asia, where investment banking fees rose 36 per cent last year to a record $11.7 billion, according to Thomson Financial - roughly the gross domestic product of oil-rich Brunei.
JP Morgan ranked fifth in the Asia-Pacific investment banking fee league table last year, with $417.5 million, up from $298.1 million in 2006, according to data from Thomson Financial.
With big stock market listings and acquisitions coming out of China, where the economy grew at about 11.5 per cent last year, JP Morgan plans to go on a hiring spree.
Roy Kinnear, JP Morgan's Asia-Pacific chief operating officer, said he expected double digit annual percentage growth in staff numbers in Hong Kong and Asia, up to 2010 or 2011.
The bank now employs 3,200 people in Hong Kong, from a total of 18,000 in Asia-Pacific.
"We're seeing significant growth in Hong Kong and the Asia-Pacific region as a whole," Kinnear said in a telephone interview. "And notwithstanding what's happening in the U.S. and Europe, I think we'll see continued growth."
JP Morgan plans to house 1,900 staff in the new 59-storey One Island East office block built in the east of Hong Kong island by Swire Properties, a unit of Swire Pacific.
Employees, including those in back-office and technology roles, will start to move in from August.
But the bank will keep 2,000 employees in the main Central business district at a time when rivals Morgan Stanley and Credit Suisse are moving to office space less than half the price across the harbour in Kowloon.
Average prime office rents in Central, where Singapore-listed Hongkong Land is a big landlord, rose about 40 per cent last year, according to property consultants DTZ.
Top monthly rents in skyscrapers in the shadow of Hong Kong's landmark mountain, the Peak, stand at around US$20 per sq ft -- approaching the US$23 charged by landlords in the world's most expensive office market, London's West End.
One Island East is charging about US$4.50 per sq ft, according to market sources, while developer Sun Hung Kai Properties Ltd charging about US$5.70 at its ICC building that will house Morgan Stanley and Credit Suisse.
Kinnear said "economic considerations" played a role in the decision to take space in One Island East, but the crowding in Central was an important factor.
"This is a growth story. We're adding rather than replacing."
Morgan Stanley and Credit Suisse will only start moving out of Central at the end of this year, and prime rents are expected to keep rising.
"We're forecasting another 10-15 per cent for the first six months," said Mark Price, head of Asia occupational and development markets at DTZ. "But, by 2009, rents will be stable or softening, once Morgan Stanley and Credit Suisse vacate."
Hong Kong, flourishing as a financing centre for China, has become a boom town for bankers, lawyers and consultants.
Four Chinese IPOs took the top spots for the biggest fee generators for investment banks in Asia last year, according to data from publisher Thomson Financial and consultant Freeman & Co. (Reuters)
JP Morgan on Asia hiring spree